A year after showing a $12.9-million deficit in its athletic budget as it transitioned from the Big East to the Big 12, WVU now is claiming an unexpected $4.7-million profit for the fiscal year ending June 30.
The profit comes unexpectedly.
In fact, last year, after announcing the unprecedented nearly $13-million loss, due mostly to at $20-million payout to the Big East in order to change leagues, athletic director Oliver Luck made this statement:
“We knew going into the Big 12 that the first couple or three years would be a financial hardship. And so far it has been,’’ Luck said. “But you have to look at it mid-term to long-term. Last year was difficult. This year and the upcoming year are still going to be tough.
“But when you crunch the numbers you have to recognize that those tough years will disappear.’’
It just wasn’t supposed to happen this year. In fact, Luck talked during the year of breaking even or turning maybe a $50,000 profit as the best result possible.
Instead, income ($77,706,696) exceeded expenses ($73,501.593) by $4,205,104.
“Now that our budget numbers are in, I want to say how very pleased and proud I am of our entire athletic department,” Luck said in a release from the school. “And, I cannot say enough about the job turned in by our Mountaineer Athletic Club staff to reach record-breaking fundraising numbers for the second straight year. I also want to thank the MAC members, who rallied around us, and the many fans who purchased tickets to various athletic events. We all know how important it is to have a self-supporting athletic department, and that goal has been reached once again.”
So, what happened? How was a healthy profit attained.
It came mainly through fundraising.
The largest source of revenue came from Mountaineer Athletic Club contributions, which reached a record of $23,916,171. That is approximately $4 million more than had been anticipated in preparing the past year’s budget.
Another area that produced more than expected was in revenue from the Big 12, which turned out to be $10,354,499. WVU’s payment from the Big 12 for television revenues was 50 percent of a full share in its first season in the conference.
This year it jumps to 67 percent as part of the deal to pay back money given the school by the Big 12 to help with the exit fee from the Big East. It becomes a full share in the fourth year in the conference (2015-16).
The second-largest revenue provider was ticket sales for all sports – mainly football and basketball — which at $21,411,615 was down about $100,000 from the previous season, not a good sign considering the direction both the football team and men’s basketball team seem to be taking.
“Oliver asked all of us to trim our budgets, but do so in a way that would not affect our competitiveness athletically or hinder our student-athletes in the classroom,” said Michael Szul, WVU Associate athletic director for business operations. “The athletic staff worked with the business office to tighten budgets, and along with our MAC donors’ generosity, we were able to reach our goal of turning an excess.”
The largest operating expense for the department came from compensation ($26,397,507). This line item includes compensation for all coaches, administrators and staff, as well as severance pay. It also includes the accrual for Other Post-Employment Benefits liability as required by the Governmental Accounting Standards Board Statement 45 and the accrual for vacation and compensatory time. While both items are non-cash expenditures, they must be added to compensation operating expenses to be in accordance with generally accepted accounting principles.
It represents a full 36 percent of the entire expenses incurred by the athletic department, three times the $8.7 million given out in student aid to the 358 athletes.
Considering the push that is now being played out in college sports to see that athletes are compensated beyond what they are earning now, one can see that it possibly could mean cutbacks in other areas to allow profits to continue to be made if that passes.
Facilities maintenance and repair ($10,669,275) were 15 percent of the operating costs, but this category also includes a non-cash expense of $5,259,824 for depreciation, which must be included to be in accordance with GAAP.
“The financial statements are prepared in the same categories that are used for the Equity in Athletics Data Analysis (EADA) report that is required by the NCAA each year,” said athletic business administrator Dia Fortney. “We employ Clifton, Larson, Allen, LLP (CLA) to complete our annual NCAA Agreed Upon Procedures. CLA reviews our financial processes each year to ensure reliability, accuracy and effective overall financial performance by the department.”
Follow Bob Hertzel on Twitter @bhertzel.
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